What’s a 21st Century Equivalent of the Homestead Act?

A typical featured article on this blog is supposed to tell my readers something they might not already know, or at least to get them to think about it in a different way. But this time I’m just trying to raise a question, hoping that the combined wisdom and creativity of the readership will come up with stuff I haven’t thought of.

Before I ask the question, some background: One of the most radical things the United States government ever did was pass the Homestead Act (actually the Homestead Acts; there were a series of them). Beginning in 1850, and picking up steam after the Civil War, the government gave away relatively small plots of land — usually 160 acres — to settlers who over a period of five years would build a home on the land, live there, “improve” the land to make it farmable, and then farm it. Wikipedia claims that 10% of the total area of the United States was given away in this manner, to the benefit of 1.6 million families. [1]

I doubt Karl Marx had much influence on the U.S. Congress (though he was writing during this era) and there’s nothing particularly communist about establishing 1.6 million plots of private property. But I like to look at the Homestead Act in the light of the Marxist concept of the means of production. In a nutshell, the means of production is whatever resources are necessary to turn labor into goods and services. So, in a given society at a given state of technology,

Labor + X = Goods and Services

Solve for X, and that’s the means of production. Today, X is complicated: factories and patents and communication systems and whatever. But for most of human history, the means of production had mostly been land. And it still could be, even in the 19th century with its growing industrial economy; if you had fertile land, you could work it and produce sustenance for yourself, plus some extra to trade.

To Marx, the problem of capitalism is that the means of production — land, factories, mines, and so on — wind up privately owned by a fairly small group of people, and everybody else can only get access to the means of production by negotiating with those people. In other words, your productivity is not up to you; you can’t just go work and collect the fruit of your labor, you need an employer to hire you, so that you can have a job and get paid. Your labor only counts if you can get an employer’s permission to use his access to the means of production. Otherwise, you’re like a landless farmer or an auto worker who has been laid off from the factory.

Marx foresaw a vicious cycle: The narrower the ownership of the means of production became, the less bargaining power a worker would have, and the larger the premium an employer could demand in order to grant access. [2] This imbalance in bargaining power would increase the concentration of wealth, making the ownership of the means of production even narrower.

Usually, communists end up talking about state ownership of the means of production, but I want to point out that that’s a method, not a goal. What is really important is universal access to the means of production. State ownership is one way to try to do that, and I’m not sure how many other ways there might be — that’s part of the question here — but the real goal should be access: If all the people who want to work can find a way to turn their effort into goods and services, without needing to make a extortionate deal with some gatekeeper, then we’re on to something.

Now let’s return to the Homestead Act. What it did was vastly increase the number of Americans with access to the means of production. Mind you, it didn’t establish universal access — if you were a freedman sharecropping in Georgia, or were making pennies an hour in some dangerous factory in Connecticut, you had little prospect of assembling a big enough stake to go out West and homestead for five years — but it was vastly expanded access.

So now you’re in a position to understand what I’m asking: What would do that now? What change could we make (where we includes but is not necessarily limited to the federal government) that would vastly increase access to whatever the means of production is today?

[1] Probably most of you have already realized that this was an example of robbing Peter to pay Paul. The only reason the U.S. government had all this land to give was that they were in the process of stealing it from the Native Americans.

I would argue that at this point the decision to rob Peter had already been made; I doubt any major figure in the government saw much future for the Native Americans other than being pushed back onto reservations or annihilated. However we do the moral calculations today, at the time Congress saw itself with the power (and even the right, though don’t ask me to defend it) to dispose of that land however it wanted.

Given that robbery-in-progress, I think the decision to pay Paul is still remarkable. It certainly wasn’t the only thing Congress could have done. The government could have applied the Spanish model, and created a bunch of large haciendas to be controlled by a wealthy elite. Or it could have applied the English model, and granted the land in huge swathes to public/private companies like the East India Company or the Virginia Company, who could develop it for profit. What it did instead created a middle class of small landowners rather than an aristocracy or a managerial elite.

[2] Workers don’t usually pay an explicit “premium for access to the means of production”, but it’s implicit when a profitable business pays low wages: Money comes in and the owner keeps the lion’s share. If you don’t like it, go get another job.

One way to read the productivity vs. wages graphs I post every few months is that access premiums have been growing since the mid-1970s, and really started to accelerate in the mid-1980s.

Comments

I believe that the method you describe of ensuring access to the means of production has been called “distributism,” which was developed in a Christian environment. I think it would be well worth digging into for the fruitful countercultural ideas we need today.

It’s also laid out in the Torah: every 49th year is a Jubilee year in which debts are forgiven and land ownership returns to its original owners (having originally been distributed equitably among the members of the tribes of Israel). Kind of like starting a new game of Monopoly every so often.

let us not forget that American soldiers from the Revolution onward were given allotments of land to supplement their service. Most of the land that Jackson so democratically stole from the Cherokees was given as allotments to slaveholders who relocated to Alabama and Louisiana. Long history of the government giving land to settlers because it helped to deal with the pesky Native American issue as well as securing our borders.

Internet does it to an extent, and, just like Homesteading Acts, not for everyone. The government has already intervened against attempts to prioritize access by coming down on the side of open internet, and it should keep an eye on 3D printing.
Also, patents in the US are a mess (esp. for algorithms and genes). Going through them with not a fine comb but a flamethrower would do a lot of good, allowing people to innovate without fear of infringing.
Opening research results for everyone would be also a good step.

Please note that this was for white people only. Not open to black
People or other PIC. This is huge. A government giveaway to settle the ones who fit the profile, and set the rest bank even further. This needs to be highlighted as we consider the positive effect TOD had: for white people. Affirmative action.

Access to means of production. Good piece. Had never thought of it that way. Today, in a far more complicated world, it seems to me that the only key to access (then land) would now be education.
Government, from local to federal levels, can provide the tools for everyone to acquire or improve their access to the means of production. Certainly NOT monsters like Core Curriculum or charter schools, but by adopting teaching methodologies that both maximize the ability of kids (people) to learn all they can (=acquire skills/knowledge) given their own innate talents.
That means revolutionizing education, and that may take the whole idea off the table, but that’s the only way to get the job done – right…
People learn in a variety of ways. Show me how, Tell me how, Let me read up on it, Let me just try it… Everyone has a slightly different mix of these preferences for learning something new. MOST people have a stronger bias to one or another way to “get it”. So teachers need to teach to their students’ strengths. So we need to prepare teachers to do this.
Then more teachers, and smaller classes. Grouped according to learning preferences and taught by people who learn the same way.
Complicated? Maybe. But maybe not!

Koshsamuipete – Excellent ideas which I heartily support. May I also add that vocational skills should be a part of the educational mix – skills which are market relevant and quality. For too long, America has denigrated vocational skills as a second class education. I include in this category those jobs that require certification (X-Ray, etc) and play a critical supporting role to academia.

Hmm. I have to strongly disagree with this. Most jobs — most ways of making a living — don’t require a lot of stuff that we learn in school or even could learn in school. Many do require reading and writing coherently, and this is an important skill that schools should be teaching. But we should stop thinking of education as training for money-earning or, worse, as an “investment”. This is a good way of teaching people that it’s only the diploma that matters, not any of the stuff they learn (which they’re not going to use for jobs.) No, the purpose of education ought to be to create (a) good citizens (b) who can use their leisure time in ways that are not destructive to themselves or others.

Doug raises a good point about vocational training, but that’s generally orthogonal to primary and secondary schooling, and college too (which is the “investment” that’s supposed to put people in the paper-shuffling class.)

As hat_eater said, the internet is the modern version of land and access to it determines the means of production for a vast majority of people. The modern “homestead act” would remove the cost associated with accessing the internet from private corporations and place it on the populace at large. Internet speeds, and guaranteed access without data limits or speed throttling would enable increased productivity and development.

First, I think about public vs. private goods as other commenters have noted:
Universal health care, high-speed internet access, quality education… If folks
have access to these goods, then it seems the risks of being an entrepreneur
are lessened. And entrepreneurs can own and reap the benefits of their
business.

What if you were to “uber-ize” everything? If I have a lawn mower and weed
whacker and some gardening knowledge, voila I’ve got my business. If I’m a
dog/cat whisperer, then I’m a pet service. If the transaction costs of safely
accessing (and thereby advertising) such services are minimal, then the need
for an “owner” other than the provider of the service is reduced.

Good question, and especially good thought about the means of production. Some things that don’t answer the question (I need time to think about that.)

The distribution of land in small holdings began far more than a century before the Homestead Acts, and was a major attraction for the German and Scots-Irish (with some Huguenot, Welsh, Scots, and Borderer) settlers on the original western frontier in the early 18th c.. The land was not always free, but if not it was cheap, and in freeholds, which was not common in England, Ireland, and on the Continent. Pennsylvania’s policy was to pay the tribes who held the territory, although the dealings were sometimes not fair, and which tribes were the actual landholders not always clear. The Iroquois, for instance, claimed large areas “by right of conquest” that were arguably not theirs. Virginia had a deliberate policy of settling smallholders west of the Tidewater plantations, with an unsettled zone east of the Blue Ridge, to form a buffer against the French and French-aligned Indians. The same arrangements for grants to smallholders carried on in the settlement of Tennessee, Kentucky, and the Northwest Territory.

There is an excellent analysis of this in the Northern Neck of Virginia in the early 18th c. by Warren Hofstra in The Planting of New Virginia: Settlement and Landscape in the Shenandoah Valley. He maintains that the goal of the smallholders was competency – sufficient resources (means of production, essentially) to support a family and pass on enough for the children to achieve competency, also, rather than the accumulation of wealth and power, the goal of the Tidewater plantation owners.

The smallholder model couldn’t compete in areas where large areas of land were suitable for work by slave labor. That strikes me as the same mechanism that made small family farms in the Midwest and California uncompetitive in the late 20th century, although it was capital for equipment rather than free labor as well as large landholdings needed at that point.

And i think my favorite theory of the separation of liability from capital, in limited liability corporations works in here somewhere. Hence the suggestion of co-ops is a good one. Maybe, working from the idea of competency rather than wealth, and looking at what resources people need for competency today. Possibly not re-allocating resources, but freeing them, such as eliminating many zoning restrictions, and licensing that serves only as a barrier to entry, not as an assurance of competence, plus restoring liability to corporations (and co-ops, to the extent that they are LLCs). (I’m sort of a free market syndicalist, I think.)

Equivalent of land – credit. Beneficiaries – anyone who needs it to start a business, move to get a better job (or any job), get training, etc. Think the microlending that is done in Africa but on a different scale. Access to the internet is fine, and definitely there should be more effort to get broadband access into underserved places (like many neighborhoods in Detroit), but to give people an opportunity to lift themselves out of poverty (this is what we are talking about, right?) the “stake” that the government can give them is easier access to credit at reasonable terms (I’m glaring at YOU, payday-loan-and-all-your-equivalents industry), which gives people options to improve their status.

This is a very interesting topic. I may post a few times, but I’ll try
not to rush into things so I can think things out.

I honestly believe that the current greed based capitalist system is going to destroy the human race. The number of people making money will decrease, as the money they make increases. Eventually, the global number of have-nots will outnumber the haves, and there will be a revolution that overthrows western society. This is what Karl Marx was predicting with his idea of permanent revolution.

We are seeing a familiar cyclic revolutionary cycle, but this time played out on a global scale. It’s scary to think what would result from such a broad upheaval of global order. It definitely wouldn’t be good.

So, this is kind of an important topic if we want to, you know, survive. It’s definitely worth spending a little time thinking and talking about. Thank you, Sift, for bringing this up. I will continue in responses to this comment, feel free to jump in anytime.

Starting with the Homestead Act. I get what Sift is saying here about how it increased access to the means of production. I think it was true at the time. But it wouldn’t work nowadays. Food production is too complicated for a small operation to make money and compete on the global market. Establishing small markets or communes would do something, but it would never put a dent in global food production.

I love the idea of a homestead life of self reliance, but it’s not going to solve the problem. You’re just making poor people who can support themselves. This is not alleviating poverty like the original Homestead Act was intended to.

So if we can’t give people land, what do we give them? Money? Yeah maybe. On to guaranteed income!

Guaranteed Income is a cool idea. But I worry about implementation. If rich western countries establish it for their own citizens, then it’s only reinforcing the western privilege that allows us to beat up the rest of the world. This fuels (very justified) resentment that leads to terrorism, and eventual revolution.

If guaranteed income isn’t established across the board for all humans, it will be a failure. It’s intimidating to think about feeding and sheltering seven billion humans. But we have to do it. Give every human on earth access to food, water, and health care. This is called World Peace.

World Peace is a cool idea too. If you are relatively comfortable compared to people around you, you will not commit a crime that would endanger your status. Make the consequences that you lose access to guaranteed income for a period, and you will deter a lot of crime. Cut out countries that start wars, and you will stop a lot of wars. People don’t give up comfort and security for strife and violence. The reason we are currently in a state of Antipeace is that many people globally do not have security.

Guaranteed minimum income means everyone has enough money to get by. That’s going to be a different number for an American than it is for a Ugandan. The amount you get is tied to the cost of living in your area. Everyone gets one share.

Multiply that by seven billion people. We don’t have a real estimate of what it would cost, so lets say 10 to 100 trillion dollars. That happens to be about what the global economy is worth.

So we would be spending every buck on Earth, and what do we get for it? Seven billion happy people and World Peace. Versus today’s system, where we spend every buck on Earth, and we get fat CEO’s and swollen corporate profits. Plus poverty, global warming, and terrorism.

What I’m talking about is a redefinition of how money works. Money isn’t something you can posess and hoard, it is something that flows through you. Like electricity in a circut, the money is briefly in your pocket, and then it passes on to the next person. No one is saving money, because they already have everything they need.

This may stop people from doing anything at all. They may sit on their asses all day. But you can fix that. A person should start out with one share. Get an education? That’s a slight increase to your share. A college education could get you a 1.2 share. Become a doctor and get a 1.5 share. That means more money for you, and an incentive for people to provide value to our society. You can increase your share, and be wealthy compared to others. But that only applies to you, you can’t pass that on to the next generation.

We recognize that humans hold the true power. Corporations make products, but they need humans to buy their products. We can take advantage of corporations, cause they’re not people. If anyone is going to suffer, I would rather it was corporations than humans.

So take the total estimate for the year. What it’s going to cost for everyone to live till next year. Put a price tag on that. And finance it with corporate wealth.

Lets say it’s 10 trillion dollars. Apple puts in $500 billion. That means they are financing 5%. That’s great. They advertise that on their products, everyone is impressed, and they buy more Apple products. Microsoft gives 1 trillion, a 10% share. Wow, we’re even more impressed! Everyone (ON EARTH!!!) goes out and buys a windows phone or whatever.

We can set it up so corporations are competing over who gives us the most money. It’s in their interest. They get more money by advertising a bigger share versus their competition. And the money goes back to them anyway. They have tripled the number of people with access to their products, and that means all those people are putting money back into the corporations. Like a cycle.

You may notice I left out a few parties. State governments and Banks would no longer be necessary in my system. This is a global idea, so it is bigger than state governments. Banks are ellimanated on purpose, because they are the rotten appendix in the economy, gathering up all the wealth until they get sick enough to burst and kill us all.

Since this is global, a lot of the military power in the world would be redundant. Something to defend the human race, but we’re not killing each other over what side of a border we’re on.

Anyway, that would be my version of the Homestead Act. It would eventually lead to problems, but I think it would buy the human race a couple hundred years maybe.

Thanks for reading, if anybody read this. I give this idea to the human race, maybe it’ll do some good. Heh.

The Democracy Project at the University of Maryland runs http://www.community-wealth.org, a robust site that’s devoted to answering The Sift’s big question. I recommend “America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty and Our Democracy” by Gar Alperovitz, cofounder of the Democracy Project, which explores all the ways wealth can be built beyond the boundaries of greed-based capitalism — cooperatives, community land trusts, worker-owned businesses, and several other forms. Marjorie Kelly, author of “The Divine Right of Capital: Dethroning the Corporate Aristocracy” has now joined the Democracy Project, and she and Gar and the Project’s staff are working full-tilt to democratize our economy.

Guessing it won’t be any one thing, but what about panel vans? Presumably it has to be something services centric (with automation farming and manufacturing can’t employ enough people), and panel vans (and pickup trucks) are one manifestation of the modern trade economy.

Also anti-trust laws. Originally anti-trust laws were supposed to protect employees as well as consumers. It was the Regan administration that change to the test to just “Will this merge benefit consumers?”

Lots of good ideas here. It would have to be a government giveaway that also required substantial effort on the part of the recipient. One example would be free education at a public college with a minimum GPA requirement, not that different from many scholarships.

Resistance to this is a symptom of the cult of American individualism. If you think that a college education serves no purpose other than helping someone get a better job and make more money after graduation, then the cost of that education is nothing more than a personal investment, so of course government should not pay for it. But if you view the idea of an educated populace as desirable in itself, as something that contributes to the welfare of the society as a whole, then paying for others to get that education makes sense.

This is the obstacle any modern Homestead Act will face – the obvious indirect benefit to everyone will be outweighed by the perception that it’s a giveaway to individuals for their own personal benefit.

Still thinking, but it struck me that what was key about the Homestead Act(s) and the land distribution in the 18th c. was that the government was giving something away that it had tons of, and also needed somebody to do something with it. It wasn’t a large cost to the government or a major redistribution from the wealthy; it created wealth. I haven’t come up with the next equivalent – but it occurred to me that we did do this in the 90s – the government built the Internet in the 80s and 90s, and essentially gave away the bandwidth for anyone to do anything with – all they had to do was get something to connect with and then build something, or even just put data up. And we had a huge tech boom; we transformed society, again, in less than 15 years. Then there was a long argument about restricting access to that means of production, which seems to have been at least temporarily preserved. And we need to finish providing that access to everyone – half of my state has no high speed access, and i think even less have a cell signal.

That’s a great example, LdeG! America’s space program is also credited with many inventions that have made life easier…and most of them spawned commercially successful products through the efforts of creative entrepreneurs.

Social Democracy is one option. As hinted above by commentators talking about health care and minimum income, if there’s a working social safety net the cost of risk-taking or bad choice of parents[1] is greatly reduced. I grew up in Aotearoa at a time when we had universal health care, neonatal and infant care (Karitane/Plunket if you want to research), school dental, right through to free university education, the works. Plus we had ACC, a kind of social third party health insurance that covered long-term health care for injured and disabled people. That approach gave the world bungee jumping, as well as a whole pile of somewhat more important innovations.

One of the results was significant drops in crime, unemployment, poverty and so on. Partly through a deliberate focus (policy goals of full employment, “no child left behind” and so on), but also as side effects of those things – when people have options other than crime, they overwhelmingly take them. It took 20-odd years of far right economic dogma before kiwi cops routinely carried guns, for example.

It’s probably easier to describe to a neoliberal/libertarian as “social capital” – the state invests money into people with the expectation that they will get a better society out of it.

[1] the overwhelming cause of bad life outcomes is being born to poverty-stricken parents. Why people choose to do that is a source of puzzlement to libertarians and other “you choose your life” theorists.

Would lotteries qualify? They certainly do redistribute wealth. The original national lottery of Canada, called the 649, has a jackpot that can carry over for many successive draws because no one has the winning number, but it also recently added a “guaranteed prize draw”, with a number appearing on your ticket that has to be matched by someone. That is worth $1, and in effect, 104 new millionaires are created in Canada per annum. I think our lotteries could do better as a method of redistributing wealth, who needs to win a jackpot of $65 million? With some redesigning this could work better to enrich people, and if cash is not the means of production nowadays, I’d like to know what is. With cash you can start a business, an industry, anything, that could potentially support you and your family through life.

The problem with lotteries is that the people who participate in them tend to be lower-income, to the point that they are sometimes called a “tax on the poor.” When people are in desperate financial straits, they can view the remote possibility of striking it rich as a valid reason to spend money on them, to the point of even foregoing necessities. Lotteries also make it easier for people with a gambling addiction to fall prey to this temptation.

Lotteries also aren’t equivalent to the Homestead Act as the revenue comes directly from the public, with the state taking its cut to finance other, unrelated services such as education.

Lotteries don’t work, though. People who win are rarely happier afterwards, and often no better off financially. It’s very hard to go from scraping by to managing a big chunk of money, the skills required are not at all similar (even excluding social effects). And will it really help someone who’s homeless to be given a scratch lotto card and told “this is it, the only assistance you get is this chance to win $1M”?

At a societal level, the problem is how you choose the “winners” – you have 40% of the population getting some form of welfare, and another 10% should be but aren’t. Call it 15 million people. If you spend a billion dollars on this every year, that’s 1000 winners. Which of the 15M do you choose – the poorest? By net assets, net income, taxable income… what? Are people in prison eligible? And so on.

And you also have to choose the losers. If you want 1000 new millionaires a year, you need to take $1B from some other part of the budget, almost certainly the welfare budget. So in Canada, drop the GIS from $500/mo to $300, say. A couple of million pensioners will be grumpy, a few will die, but you’ll have 1000 new millionaires to boast about.

The threat of eminent domain might encourage current owners of vacant properties to lower their rent to the point where someone can afford it. Or maybe they would work out more creative deals where, for example, the rent is a portion of the business’s profit once it reaches profitability.

On potential problem would be the effect on the established small business across the street who IS paying rent. They might have a hard time competing. The new business will be able to afford to sell their products/services at lower prices. This might be avoided by carefully selecting recipients of vacant storefronts based on what types of businesses are lacking in the area.

Your proposal isn’t equivalent to the Homestead Act, because it doesn’t entail government distributing anything. Instead, it’s using the power of government to force people to do something they wouldn’t do otherwise. A better solution would be to offer some kind of additional tax credit if the property owners lowered their rent.

I wasn’t proposing anything. I was just discussing the possible consequences of Mary Salit’s idea, which is to take back vacant, unused properties and redistribute them to people who will put them to use.

Your idea of a tax credit to the property owners is an example of supply-side/trickle-down economics rather than a redistribution of the means of production. You’re paying the current owners of the means of production, hoping that the benefit trickles down to those who actually need it. History shows that very little ends up trickling down, if anything.